Understanding the Distinctions Between IT and Balanced Scorecards
The term Scorecard has been widely associated with the concept introduced by Kaplan and Norton in their 1992 Harvard Business Review (HBR) article, and is often referred to as the 'Balanced Scorecard' (BSC). However, in the context of Information Technology (IT), the scorecard may take on a different form, which we refer to as the IT Scorecard.
The Evolution of the Scorecard Concept
The origins of the Balanced Scorecard can be traced back to Kaplan and Norton's groundbreaking work. The Balanced Scorecard is a strategic management tool used for the communication and evaluation of strategic goals and objectives. It provides a framework for translating an organization's strategy into specific targets for performance metrics. However, the IT Scorecard takes a slightly different approach, focusing specifically on the strategic and performance metrics relevant to Information Technology.
The Key Differences: Perspectives and Focal Points
The fundamental distinction between a Balanced Scorecard and an IT Scorecard lies in the perspectives from which they are viewed and utilized. The BSC is designed to encompass four distinct perspectives: financial, customer, internal business processes, and learning and growth. These perspectives are intended to provide a holistic view of an organization's strategic objectives.
In contrast, the IT Scorecard may emphasize a narrower set of perspectives that are more directly related to the IT functions. For example, IT Scorecards often focus on metrics related to technology infrastructure, change management, project management, security, and compliance. These metrics are not necessarily captured in the broader BSC framework, as they are more specific to the IT function.
Case-By-Case Customization
It is important to note that any variations or alternative forms of scorecards beyond the original Balanced Scorecard are highly customized and derivative. There is no such thing as an 'official' IT version or HR version. The authors of these alternative forms, often consultants, are trying to establish their own competitive niches by tailoring the scorecard to fit specific organizational needs. However, the validity and application of these alternatives should be carefully evaluated on a case-by-case basis.
The Significance of Customization
The significance of customizing scorecards cannot be overstated. Organizations must tailor the scorecard to their unique strategic goals and operational needs. This customization ensures that the metrics are relevant and accurately reflect the performance of the IT department or the organization as a whole. It also allows for more accurate alignment between IT initiatives and business objectives.
Conclusion
In conclusion, while the Balanced Scorecard and the IT Scorecard share some fundamental similarities, they differ significantly in their perspectives and focal points. The BSC is a general framework designed to provide a comprehensive view of an organization's strategic objectives, while the IT Scorecard is a specialized tool that focuses on IT-specific metrics. Understanding these distinctions can help organizations design and implement scorecards that best meet their needs, whether they are general strategic management tools or IT-specific performance metrics.
By exploring the distinctions between these two types of scorecards, organizations can better align their IT strategies with their broader business goals and objectives, ultimately leading to improved performance and better decision-making.